Sunday, January 15, 2012

More Kim Lane Scheppele on Hungary

Yesterday, the European Commission issued a stern warning to Hungary. In blunt language, the EU asserted that it “reserves the right to take any steps that it deems appropriate, namely the possibility of launching infringement procedures” against Hungary for violating the basic conditions of membership in the European Union. The Commission singled out the laws crushing the independence of the central bank, the judiciary and the ombudsman for data protection as the most egregious, but indicated that it was reviewing more laws as well.

The US has also indicated its serious displeasure with the course that Hungary has taken. The Secretary of State wrote a strong letter to the Hungarian Prime Minister Viktor Orbán just before the New Year and the US Ambassador to Hungary has pronounced herself to be “disappointed” with the government, so disappointed that she did not attend the gala celebration for the new constitution held at the magnificent Opera House on 2 January

The markets have issued a judgment on Hungary as well. Last week, the forint reached an all-time low against the euro and Hungary was unable to sell short-term government bonds in the markets. Its 10-year bonds must promise a nearly 10% yield, unsustainable over the long haul. . After Europe showed yesterday that it was ready to pressure Hungary into complying with its demands, Hungary’s short-term bonds must now promise nearly the same yield as its long-term bonds, but that is an improvement over not being able to generate any acceptable bids for short-term debt at all. .

Hungary needs the EU, not just to keep providing the “cohesion funds” that constitute a little under 2% of its total GDP, but also to give the go-ahead to the IMF to provide the country with the standby loans it needs to avoid bankruptcy. US support is also crucial. And, as a country completely enmeshed in an international economy, Hungary needs the markets.

Hungary’s politics are killing its economy. But the Hungarian government insists that it is still a democratic country, somewhere in Europe.

The government has started to say in international venues that it is open to modifying the offending laws. . And this has started to calm the nervousness of the markets.

But, as usual, what Orbán says in English to foreigners is contradicted by what he says and does in Hungarian and at home. Few who have watched at close range as he has built up his party organization over the last 20 years believe that a few European threats will cause him to give up his long-term aims to stay in power for “25 years” as he has repeatedly promised. He has often invoked as his model the interwar right-wing Prime Minister Miklós Horthy who governed from 1920-1944. He apparently wants to beat Horthy’s record.

Orbán no doubt believes he has some wiggle room with the Europeans. Along with many observers, Orbán could reasonably doubt that Europe has the will to require Hungary to roll back its all-encompassing anti-democratic program. Even if Hungary changes its laws on the central bank, judiciary and data ombudsman, most of the autocratic structure that Orbán has built will remain in place.

Will Europe really have the stomach to require not only a change in the law on the judiciary, but also the reinstatement of all of the judges who have been fired? And would it do so in the face of a letter from the Hungarian Judges Association written on January 7, saying that all is fine with the judiciary in Hungary if only people will stop attacking it? (Never mind that the letter appeared after the law went into effect, so that now a Fidesz loyalist may demote any judge in the country upon her say-so alone.)

Will Europe require that Fidesz play nice with other political parties by including opposition members in crucial positions throughout the independent regulatory bodies? (Never mind that all of the opposition parties, including the Socialists [MSzp] are presently even more disliked than Fidesz and that the only party that has seen any uptick in its support of late has been the far-right Jobbik party.)

Will Europe make Fidesz roll back its appointments to the Constitutional Court and restore the ability of citizens to challenge laws in the abstract before the Court? (Never mind that major decisions of the Constitutional Court interpreting the old constitution have already been effectively overturned by the new constitution. Most recently, this includes a constitutional amendment that allows the public prosecutor to choose which judge hears each specific criminal case.)

Europe will have to do a lot more than demand small legal changes to reverse what has happened. The anti-democratic reforms have gone too far. This is a government that has passed nearly 400 major laws, changing virtually every aspect of government in Hungary. And all of those laws have all already gone into effect, so that Fidesz party control over all of Hungary’s political institutions is very nearly complete already. Right now, the EU is singling out three laws for revision. There are many more laws where those came from. And given that FIdesz has already managed to entrench its most loyal inner-circle members in positions of power across the government, most with very long terms of office, it can afford to roll back a few laws without seriously losing control. So fine – change a few laws!

Unfortunately, Europe does not have a lot of room for maneuver. Not only has FIdesz already consolidated its grip on the Hungarian political space, but there is not yet an effective opposition to engage Fidesz at home in restoring a democratic balance. Fidesz lives in a domestic environment in which the far-right Jobbik party has called for Hungary to withdraw from the EU. . Many of Orbán’s few remaining supporters no doubt think the same thing. If Europe pressures Hungary to make changes substantial enough to roll back what Orbán’s party has wrought, will Hungary even stay in the EU? Majorities of Hungarians no doubt want to remain European, but those aren’t the Hungarians that hold this government in place.

Is there an alternative for the majority of voters who say that they have no party for which they want to vote? Protests within the country are increasing, but so far they have no obvious political organization into which to channel their frustration. The only sign that a political organization may be forming to contest Fidesz domination is a manifestofrom former Prime Minister Gordon Bajnai that explains one way forward. But, as is typical for any critic, Bajnai is already being savaged by the government-controlled media. Even before he came forward with this program, Bajnai was operating on the knife-edge of threat as his personal finances have come under repeated Fidesz scrutiny – part of an aggressive campaign to discredit anyone who might challenge Viktor Orbán. . Anyone who wades into the political space in Hungary can expect vilification in the media, false accusations and even not-so-veiled threats to any job or money they might have within the country. Hungarian politics is a bare-knuckled affair.

Will the Fidesz government succeed in convincing Europe that Hungary is still a European democracy so that it will get away simply changing a few laws? More about the defenses the government has been offering in my next post.